A large proportion of the world’s most significant diseases have scientifically established dietary components in their clinical pathology. Epidemiological studies have supported this theory and advances in molecular nutrition have firmly cemented this assertion as scientific fact. Increased consumer demand and greater commercialization of scientific breakthroughs have seen health foods also known as functional foods emerge as a sector of huge potential. The health food industry in China is believed to have massive growth potential. Currently, China’s consumption of health foods is far below that of many developed countries. China as the second largest and the fastest growing health food market in the world has great opportunities for foreign enterprise.

Although the potential of the health food market in China is huge, the consumption of health foods in China is still low:

National consumption amount of health food

Only accounting for 1.47% of the total retail sales of consumer goods

National urban and rural consumption expenditure on health food per capita

RMB 31 each year
1/17 of the United States
1/12 of Japan

Expenditure of consumers on health food on average:

China

Only accounting for 0.07% of its total expenditures

Europe and the US

Accounting for 2% of its total expenditures, which is 29 times higher than that of China

Data source: Speech by Professor Lin Songzhou in 2011 (PhD of pharmacology of University of Tokyo)

The rapid entry of foreign companies into China’s health food sector has contributed to the increased competitiveness and dynamic growth of the health food market in China. Foreign health food players, especially the multinational companies, take advantage of the opportunities and strengths in finance, original R&D, production, marketing capability and the generally perceived higher quality of products by consumers in China over those of Chinese domestic enterprises. It is expected that more foreign health food companies and brands will enter China to capitalize on the growth opportunities.

In January, 2012, the National Development and Reform Commission as well as the Ministry of Industry and Information Technology of the People’s Republic of China jointly issued 12th Five-Year Development Plan for Food Industry, in which the nutrition and health food manufacturing was highlight as a priority for the first time. The plan pointed out that the nutrition and health food industry in China would maintain an average annual growth rate of 20% by 2015, and there would be at least 10 companies each with the sales of over RMB 10 billion.

The State Council issued Several Opinions on Promoting the Development of Health Service Industry in October 2013, which put forward that the current goal for expansion would see the total value of health service industry reach more than 8,000 billion RMB by 2020. In this manifesto the government explicitly indicated that health food industry would be one of the five pillar industries.

Part I. Introduction

1.1 The definition of health food products in China

In China, health food refers to food products which claim to have specific health functions or supplement one’s vitamins or minerals. Health food is suitable for the consumption by specific groups of people and has the effect of regulating human body functions, but is not used for the purpose of treating diseases (Provisions for Health Food Registration (Interim) in 2005).

The definitions of health food are quite different all over the world:

China

Health Food

United States

Dietary Supplement

European Union

Food Supplement

Canada

Natural Health Products

Korea

Health Functional Food

1.2 Classification of health food

(1) Two categories

Food with specific health functions: Such food, which shares common properties with general food, can regulate human body functions. In other words, it refers to food which is suitable for the consumption by specific groups of people and has the effect of regulating human body functions, but is not used for the purpose of treating diseases.

Nutritional supplements: These products, with vitamins and minerals as major ingredients, are used for the purpose of supplementing nutrients for the human body. There are single-ingredient and multi-ingredient nutritional supplements.

(2) Three categories

Traditional health food: This refers to products which are prepared using traditional Chinese methods and basing on the concept of regulation and balance in traditional Chinese medicine.

Modern health food: This refers to health products which use nutrients or supplements as major ingredients.

Functional health food: These products include those used for specific health purposes, such as nourishing the heart, nourishing the liver, improving sleep and facilitating digestion.

Notes: when a certain health food applies for certification, it can be classified either as functional health food or as nutritional supplement and cannot be classified as both at the same time.

1. 3 The differences between health food, conventional food and drugs

Health food vs. Conventional food

(1) Health food has specific health functions.

(2) There are dosage limits for health food.

(3) There are suitable groups of people and unsuitable groups of people of health food according to their different health functions.

Health food vs. Drugs

(1) Health food is not used for the purpose of treating diseases.

(2) There are dosage limits for health food, which will not have any form of harm whether it is acute, sub-acute or chronic. Drugs may have toxic and side effects.

(3) Health food can only be taken orally, while drugs can be taken by injection or smearing.

(4) Toxic and harmful substances cannot be used as the raw materials of health food.

1.4 Market Analysis

1.4.1 Market status of health food industry in China

According to the statistics from Blue Book of Health Care: Annual Report on Health Care Food Industry of China No.1 (2012 Version), there were 897 health food enterprises that passed GMP certification in 2005, and the figure increased to 1,600 in 2009 with the annual output value of health food more than RMB 100 billion. There were about 2,600 health food manufacturers in 2010, and the industrial scale of health food in China was more than RMB 160 billion with the market scale more than RMB 400 billion. Although the proportion of health food industry is not large in the whole food industry with the output value of more than RMB 5,000 billion, it has developed steadily and fast in the recent years. Meanwhile, China has become an important raw material supplier and consigned processor of preparations in the world health (functional) food industry.

1.4.2 The proportion of consumers who had purchased health food in the first half year of 2012

In the first half year of 2012, the proportion of consumers who had purchased health food was 68.7%.

1.4.3 Purchasing frequency of health food

According to the market research of China Health Care Association, 40% of the consumers purchase health food habitually purchase health food products. 24% of consumers purchase health food once a quarter. 22% of the consumers purchase health food when they have a specific need. 8% of the consumers purchase health food once a month. 6% of the consumers purchase health food once a year.

Changing consumer preferences and rising health awareness: health scares such as SARS and avian flu lead to consumers looking to boost their immunity against diseases.

An aging population: by 2050 it is projected that 541 million people will be over 60.

Traditional gift-giving at Chinese festivals and holidays: consumers are increasingly giving health food products as gifts at major Chinese festivals and holidays.

Urbanization and increasing GDP per capita: increasing numbers of Chinese are relocating to urban centers and urban centers have higher wages than rural areas.

1.4.5 Existing problems of health food industry in China

(1) Homogeneity of products on market: There is a lack of diversity in products with low technological content and weak market competitiveness.

(2) Health food products are poorly understood by the public.

(3) The creditability of some health food manufacturers and operators is low. Some use false advertising to mislead and deceive the customers.

(4) The scale of health food enterprises in China is relatively small.

1.4.6 Main directions of scientific research on health food in China

(1) “Preventive treatment of disease” and improvement in functional lifestyle parameters is one of the major subjects for researching health food in future.

(2) Prevention of chronic diseases related to the current living style is the main objective of health food R&D.

(3) The health food with Chinese herbal medicine as the raw materials is the major characteristics of Chinese health food.

(4) Combination of modern biological sciences and traditional medicine is the main approach of health food R&D.

(5) Food as the carrier is the future direction of health food R&D.

Part II. Health Food Regulation

2. 1 Overview

As of 2012, the China Food and Drug Administration (CFDA) had approved a total of 12,890 health food products, of which, 12,197 were domestically made and 693 were imported. According to estimates, in China’s health food market, functional food accounts for about 65% while nutritional supplements account for the remaining 35%. Among all imported health food products registered in China, the majority come from the US, followed by Hong Kong and Japan. By category, most of the registered imported health food products are for enhancing the immune system, accounting for 26%; nutritional supplements account for 18% while those assisting blood lipid reduction account for 12%.

From January 2011 to December 2011, CFDA received the registration application of 1,093 health food products in total, of which, 24 were imported, and others were domestically made. From January 2012 to December 2012, CFDA received the registration application of 1,087 health food products in total, of which, 13 were imported, and others were domestically made. In addition, the number of health food products both for registration application and approval is stable during the previous two years.

Notes: the passing rate in 2011 was 72.4%, and that in 2012 was 70.7%, which is quite stable.

2.1.2 Difficulties in imported health food registration:

Raw materials: Some of the raw materials used in foreign health food products are not generally used in China. Dose: The doses of imported health food have to be in compliance with CFDA’s preset minimum and maximum daily dosage limits. This can sometimes present challenges for foreign health food as they may have been formulated with dose amounts in accordance with the regulations of their home countries – which may be different from those of the CFDA.

Formula: The formula is not reasonable or lacks scientific evidence. The raw materials of the formula do not conform to the claimed functions. It may have safety issues for the formula.

New product registration: it is difficult to register new health food products that have not appeared on the foreign market.

New function claims: The cost for applying for new function claims that are not in the scope of the 27 claims is very high.

2. 2 Legislation situation of health food in China

Food Safety Law of the P. R. China (2009)

Decree on the Administration of Health Food (MOH, 1996)

Administrative Measures on Registration of Health Foods (CFDA, 2005)

Regulation on the Implementation for the Food Safety Law of the P. R. China (2009)

According to the product’s features and material properties, the following tests might be required to be conducted as well: declare hormone, doping, strain identification test, raw material species identification.

2.3.3 Required Documents of Health Food CFDA Registration

(1) Health food registration application form

(2) A copy of legal registration certificate of applicants

(3) Product’s Chinese name approval notification

(4) Letter of guarantee starting no infringement of preparatory rights

(5) Copy of trademark registration certificate

(6) Product R&D report

(7) Product formula and formula basis, and the origin and usage basis of raw and supplementary materials

(9) Diagram of productive techniques, detailed explanation (including original and translated version) and related research materials

(10) Product quality standards (corporation standards, including original and translated version) and its compiling explanation, and quality standards of raw and supplementary materials

(11) The category, name, quality standards, and selective basis of packing materials that in contact with products

(12) Test report issued by accredited organizations

(13) Sample product label and usage instructions

(14) Legal production qualification issued by country of origin

(15) Notarized letter of authorization to Chinese agent and copy of its business license or registration of representative office of foreign company

(16) Marketing approval showing products has been sold in country of origin for more than one year

(17) Relevant standards of producing country (area) or international institutes

(18) Samples of package, label, directions used in original country, and its Chinese version

(19) Other information helpful for evaluation

(20) Unopened samples of three production batches

2.3.4 27 Function claims are approved for health foods:

1. Enhancing immune function

2. Aiding blood lipids reduction

3. Aiding blood sugar reduction

4. Increasing antioxidants

5. Improving memory

6. Relieving body fatigue

7. Relieving eye fatigue

8. Facilitating lead excretion

9. Clearing throat

10. Aiding blood pressure reduction

11. Improving sleep

12. Increasing milk secretion and anti-mutation

13. Improving endurance during anoxia

14. Aiding protection against irradiation

15. Aiding weight loss

16. Improving growth and development

17. Increasing bone density

18. Improving nutritional anemia

19. Aiding protection against chemical liver injury

20. Removing acne

21. Removing chloasma

22. Improving skin moisture

23. Improving skin oil content

24. Regulating enteric bacteria flora

25. Facilitating digestion

26. Improving constipation

27. Aiding protection against gastric mucosa

2.3.5 Function claim adjustment

According to the Proposals on Adjustments of Scope of Health Food Functions (Draft for Comments) issued by CFDA in June 2012, it is planned to remove 4 function claims, which are improving growth and development, aiding protection against irradiation, aiding blood pressure reduction, and improving skin oil content.

The function claims of removing acne, removing chloasma and improving skin moisture will be combined as improving facial skin health.

There will be 18 function claims after adjustment.

2.3.6 Application and approval period of health food:

The period of application and approval of health food is different for different function claims. Generally, the duration is 1-2 years or even longer. The duration of imported product will be longer than that of domestic products.

Health food re-registration refers to the process that CFDA extends the valid period of health food approval certificate when it expires according to the application by the applicant as well as legal procedures and requirements.

The applicant of health food re-registration should be the holder of health food approval certificate.

The applicant should apply for the re-registration three months before the certificate expires. CFDA will renew the approval certificate with the same approval number.

2.3.11 Health food production certificate

(1) The enterprises that apply for health food production certificate should have Domestic Health Food Registration Certificate, and comply with basic condition specified in Health Food Good Manufacturing Practice.

(2) Relevant enterprises should apply to provincial food and drug administration division for the health food production certificate where the production site located, and provide relevant materials.

(3) After receiving application materials, provincial food and drug administration division will make formal examination of the application materials for its normalization and completeness within 5 days, and decide if the application will be accepted.

2.3.12 Requirements for labeling and instructions:

(1) It should not claim the function of the product is to prevent or treat any disease.

(2) It should indicate clearly who is the appropriate and/or inappropriate consumer for the product, accurate labeling of active/marker ingredients and their contents.

(3) The functions and ingredients must be consistent with those on the label and in the instructions.

2.3.13 Important notes:

(1) All health food products should be approved by CFDA before sales. Local food and drug administration bureau does not have such right of approval.

(2) There are 27 function claims that have been predefined by CFDA for health foods. The period of application and approval of health food and the expense are different for different function claims.

(3) Imported health food products must have been sold in foreign market for more than one year before being registered in China.

(4) Health food products with different names and formulas should be inspected and applied for registration respectively (expect for the items that belong to the same series).

(5) Health food registration application should be made after inspection is passed.

(6) The valid period of health food approval is five years, which should be extended after expiry. It will not be charged for the extension.

2.4 Health food regulatory trends

CFDA promulgated the Announcement to Further Regulate Health Food Supervision and Management and Crack down on Illegal Activities at the end of September 2013.

(1) The products without health food approval number should not claim healthcare function on its label and instruction.

(2) The products in the dosage forms of tablet, capsule, oral liquid, granule, pill, etc. with reference daily intakes should not be included into food manufacturing certification range (with QS Mark).

(3) There are stricter requirements on raw materials. Imported raw materials for health foods must be approved for health food use. It is prohibited for conventional food to use the raw materials that are only for health food.